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The Ecology of Economy

Oikos: It’s not just a yogurt, it is the Greek word for “home.” It also is the root word for the “eco” in “economy” and “ecology.” Seeing how these two words have been presented in modern politics as the antitheses of each other, it is strange to see them linked to the same concept of a home. But in truth, no relationship could be more meaningful. Both ecology and economics are the study of the relationships between diverse actors and the complexities contained therein: we think of economics as the interaction between producers and consumers, and ecology as the same between plants and animals. Equally as important is the close relationship shared by these two sciences, especially in areas such as forestry, where they tend to be highly dependent on each other. The health of a forest is largely a function of the health of the markets and vice versa. It is difficult to look at one without viewing it in the context of the other.

The relationship rests on how the establishment of robust markets incentivizes the various aspects of forest operations. When most people think of logging and forestry, the product that comes to mind is dimensional lumber, but in fact this constitutes a relatively low percentage of product. Sawlogs, the name for the higher-grade timber from which lumber is milled, accounts for only 27.5% of Maine’s production. While that is still a significant number (and if we were to look at it as a monetary value, it would doubtless be higher), you can’t build an industry on a quarter of the wood in the forest. Success of the industry and the forest rests on marketing the 75% of production that is low-grade. Otherwise, wise silviculture is more expensive, and it becomes more economic to simply strip away the gold.

When this happens, it is called “high-grading.” It refers to the practice of entering the stand and only removing the most valuable trees standing. It is the most profitable practice in the short term, but in the long term, it leaves both the forest and the markets impoverished. Growing stock – the trees that are left to grow – is of low value, and the stand will appreciate at a lower rate than if it were full of higher-grade products. When the stand regenerates, these low-grade trees will then disperse their seeds. Normally this is great, but the often stunted growth and the defects carried by such trees have the potential to be genetic. In that event, offspring will also carry these defective traits. Over the long-term (perhaps exceedingly long term) the forest will be of lower value, slower growing, and more vulnerable to insects and disease. Moreover, the resulting lack of diversity in forest products will leave prices unstable.

When there is a robust or even good-enough market for low-grade timber, it becomes a whole lot easier to leave those higher grade trees to grow and reproduce. Thinnings go from being a money-sink to a money-maker. A wide variety of harvest prescriptions become economic; and foresters become empowered with the arsenal necessary to make decisions that are most beneficial for their businesses and the forest’s ecological communities.

Besides allowing for more variety in harvest types, decent markets allow for more flexibility in the actual harvesting systems used. The two most common harvest systems in Maine – whole tree and cut-to-length – are high-productivity and generally low-cost, but the machinery utilized is large and heavy, and it may lead to soil rutting and residual tree damage. These systems can be unpalatable in certain situations and among conservative landowners and small woodlot owners, so low-impact systems like horse logging and conventional cable skidder systems become an important component in the mix of management tools. All loggers and logging systems are vulnerable to lower wood prices, but the owners of such lower-impact, low-productivity systems tend to be more deeply impacted. This is not simply because of the hit on their bottom line, but also because such businesses tend to be smaller; and with weaker ties to mills they are the ones who have a more difficult time marketing depressed products.

The successful marketing of low-grade timber is neither a panacea nor a substitute for prudent management, but a necessary prerequisite in a tight-margin industry. This is a complicated business with many misunderstood and often nebulous nuances, but so too is the forest itself. Unsteady markets have a substantial human impact in rural Maine, but as a secondary effect they threaten to constrict the tools with which foresters and landowners can manage our lands. To have a healthy forest depends on healthy demand for all products from pulpwood to veneer. In turn, the appreciation and increased productivity that follows successful management can improve the lives of all who labor and live in our forests. Ecology and economy should be assessed on their own merits, but at the heart of the matter is the concept of oikos – our home. The balance of this relationship is what incentivizes the preservation of our working forests and also ensures the survival of this way of life far into the future.